Mnuchin Seen Delaying Currency Report Until After Elections
Mnuchin Seen Delaying Currency Report Until After U.S. Elections
(Bloomberg) -- U.S. Treasury Secretary Steven Mnuchin is unlikely to release a much-watched report on international currency manipulation that was due in April until after the Nov. 3 presidential election, according to people familiar with the matter.
The semi-annual report to Congress has been largely written and ready for release since the spring. But Mnuchin’s focus on combating the economic collapse precipitated by the coronavirus pandemic was, at first, the reason it was delayed, the people said.
The Treasury has been prepared to issue its report since about July, the people said, but decided not to for reasons that remain unclear. The document provides assessments on whether China or other major trade partners are artificially adjusting the values of their currencies.
The second report of the year was due this month. A Treasury Department spokesperson declined to comment.
“The delay might be due to the fact that the renminbi has strengthened, and thus at present cannot be used to point fingers at more China currency manipulation for trade advantages,” said May Lee, a portfolio manager at Neon Liberty Capital Management in New York.
Under the Trump administration, the Treasury Department’s routine, technical currency policy review has become a political cudgel in trade wars. Last year, Trump asked Mnuchin to abruptly designate China as a currency manipulator, only to remove that tag five months later when the two nations signed a trade deal.
The original designation came after the yuan weakened past 7 per dollar for the first time in more than a decade, a move that the Trump administration found to be a result of direct intervention. The offshore yuan subsequently strengthened, but again veered toward its lows after the coronavirus pandemic roiled markets earlier this year.
It has since rebounded by more than 8% from its 2020 low and this week touched 6.6278 per dollar, its strongest level in more than two years.
Delaying the report allows President Donald Trump to avoid making a public ruling on China -- either saying it is or is not a currency manipulator -- as he blames Beijing for spreading coronavirus around the world.
“The case against China is pretty non-existent, especially with the renminbi rising,” said Mark Sobel, a former U.S. Treasury official now at the Official Monetary and Financial Institutions Forum. “But this administration has politicized the currency report in ways not seen in the past.”
Switzerland and Vietnam are currently seen at risk to be designated as currency manipulators. Swiss central bank officials in the first half of this year ramped up interventions to curb a strong franc, which is seen as a haven currency. Meanwhile, the U.S. Commerce Department launched a Vietnam currency probe on allegations that the nation is manipulating the dong to hurt American businesses.
The Treasury Department releases a review of nine major trade partners to assess bilateral trade balances and other actions to judge whether they are manipulating their currencies. A designation comes with no immediate penalties but can rattle financial markets.
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